Social Security credits are based on the amount of your earnings. According to SSA.gov, they are the “building blocks” of the Social Security system
You will need a minimum number of credits to qualify for each type of Social Security benefit. It’s just like in Frosty the Snowman when Karen asks the ticket master to purchase a ticket, and he says, “No money, no tickets.” In this case, it’s: “No credits, no benefits.”
How Do I Earn My Credits
You qualify for credits when you have a job, have earned income, and pay Social Security taxes. In 2022, you will receive one credit for each $1,510 of earnings. For a maximum of four credits per year, in 2022, you need to have $6,040 in earned income.
Most people during their lifetime will have no problem earning the required credits for retirement, disability, and survivors benefits.
An important note to point out: the credits earned do not determine the amount of benefits you will receive; they qualify you to receive the benefits. Extra credits do not increase your benefits; your earnings history does that.
For more on calculating and understanding how much you will qualify for at full retirement age, please read my other article, How to Accurately Calculate Your Primary Insurance Amount | Rules You Should Know.
For more information on your full retirement age, you guessed it; I have another article on that too: The Basics: Full Retirement Age and Social Security.
There are special circumstances. If you are or were in the military: first, thank you for your service; second, you earn credits the same way as civilians do, except you may also qualify for additional benefits. I suggest reading the Military Service and Social Security publication from the Social Security website for more information.
In addition to the military, there are special rules for household workers, farm work, or if you work for a church or a church-controlled organization that does not pay Social Security taxes.
Social Security covers not every employee or worker. Here are a few examples:
- Federal employees hired before 1948.
- Railroad employees with a tenure longer than 10 years.
- State and local government employees.
What if I Change Jobs? Do I Lose My Credits?
Nope, you get to keep them. That is a good thing because the Bureau of Labor Statistics examined people born in 1957 to 1964 and held an average of 11.7 jobs. The days of going to work for one company for over 30 years, like my dad, are long gone!
How Many Credits Do I Need?
Great question. Of course, it is not a straightforward answer — that would be too easy. The type of benefit depends on your age. However, I will make it easy for you by breaking it down by retirement benefits, disability benefits, survivors benefits, and Medicare benefits.
According to SSA.gov, if you were born in 1929 or later, you will need 10 years of work or 40 credits to qualify for retirement benefits. Remember, you can only accumulate four credits per year; that is why you need a minimum of 10 years.
If you were born before 1929 and are reading my blog, please email me — I would love to chat! Back to the topic: if you were born before 1929, you would need fewer years of work. For example, if you were born in 1928, you would need 39 credits. You would need 38 credits if you were born in 1927, 37 credits if you were born in 1926, and so on.
The critical factor in determining how many credits you need to qualify for disability credits depends on the age you become disabled. Here are the rules according to SSA.gov:
- Before age 24, you will need to have accumulated six credits in the three-year period ending when you become disabled.
- From age 24 to 31, you will need to have to accumulate 12 credits when you became disabled.
- During age 31 or when older, please refer to the chart below courtesy of SSA.gov website:
Unless you are blind, you must have earned at least 20 of the credits in the 10 years immediately before you became disabled.
|Born After 1929, Became Disabled at Age||Number of Credits You Need|
|31 through 42||20|
|62 or older||40|
For your family to qualify for benefits in the event of your death, it will depend on what age you die. The younger you are, the fewer credits you will need, and the most you will need is 40 credits.
For example, as we discussed at the beginning of the article, the most you can earn is four credits per year. 10 years of work times four credits per year = 40 credits. For more on survivors’ benefits, please read my other article, How to Navigate the Maze of Social Security Survivors Benefits.
However, there is a special rule where Social Security will pay benefits to your children and your spouse caring for your children, even if you have not accumulated the necessary credits. In these circumstances, they can qualify for benefits with as little as 1.5 years of work and just six credits accrued in the three years before your death.